European Wind Power Investing

Installation Rate Doubles

If we’re going to take a look at the idea of investing in renewable energy for the long haul, it might behoove us to skip across the pond and feast our eyes on what is taking place in Europe.

European countries are proving that the future – at least for them – is going to fall on wind power. The power generation sector has made a full commitment to new projects, and according to data gathered and released last Friday by the European Wind Energy Association (EWEA), wind shows huge promise in 2013.

In just the first half of 2013, a total of 1,045 megawatts of offshore wind capacity was fully connected to the grid throughout Europe.

The numbers are staggering when you think that compared to last year, Europe has more than doubled its installation rate of offshore wind turbines in this first half of the year. At this same point in time in 2012, only 523 megawatts were on the grid.

Siemens AG (NYSE: SI), the German integrated technology company, is leading the way, conducting much of its wind power business in the U.K.

The early explosion of wind power in Europe shows what the offshore wind industry is capable of in a short amount of time.

Of course, it’s next to impossible to keep up with this kind of pace, and signs that things will eventually begin to slow down are already appearing. The financial crisis in Europe will continue to contribute to this slowdown.

In total, the offshore wind capacity for Europe is now at 6,040 megawatts, wiht 58 wind farms in ten European countries. An additional 21 wind farms are either under construction or in the preparation stages, expected to launch sometime this year, according to Bloomberg. Those 21 sites will add 5,694 megawatts to the continent's capacity.

Wind Power Growth

As I stated before, 2013 has already seen wind turbine power more than double in capacity compared to 2012. And if Europe is to maintain its current rate of growth, governments will need to start getting more involved, creating regulations that will entice investors to bet on wind for the long-term. Experts believe the one thing Europe is currently lacking is a framework and renewable energy target plan for the future.

The 1,045 megawatts that came online for the first half of this year were from 277 wind turbines that span seven wind farms: Thornton Bank in Belgium; Gunfleet Sands 3, Lincs, London Array, and Teesside in the U.K.; Anholt in Denmark; and BARD Offshore 1 in Germany, the EWEA reports.

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Most of the activity is taking place in the U.K., which operates 146 of the turbines and totals 513 megawatts. Denmark follows behind with 352.8 megawatts, Germany with 105 megawatts, and Belgium with 73.8 megawatts, according to Bloomberg.

Countries like the U.K. and Germany will rely heavily on wind power to meet renewable energy goals that have been set. This will be a key instrument in the reduction of carbon emissions.

But without more rules and regulations set forth that look further into the future – say up until 2030, where many experts believe a good foundation for long-term renewable energy lies – installations may begin to see increasing risk.

In the six months that Europe has seen wind become fully connected to the grid and more than double in capacity, only one new project has reached financial close.

There is a lack of new interest, so while things are currently moving a mile a minute, the uncertainty of future government regulations have investors tapping the brakes and holding out to see where regulations go.

Once this one critical issue is addressed, key offshore markets will then most likely resume the kind of progress the EWEA has shown for the start of 2013.

The way things stand right now: Siemens AG took 83 percent of the growth, Bard Holding GmbH has 10 percent, and Suzlon Energy Limited (NSE: SUZLON) has 7 percent.

While it is inevitable that wind can’t continue the torrent pace it is on right now, it’s also clearly evident that Europe is going with wind for the future; it just needs to institute a clear program and strategy for the long-term outlook.

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